The public finances are in their most lamentable state ever in peacetime. The school building programme has been axed, and huge redundancies are on their way as the public sector struggles to find savings of 25% from their budgets. Yet campaigners for Equitable Life still harbour delusions that they merit £5bn in compensation.

In reality, they should be grateful that, at a time of deep austerity, they are in line even for £500 from the taxpayer. This column has long argued that although there was evidence of maladministration, compensation should only restore policyholders to the position in which they would otherwise have been.

And that would have been nasty. Over the last decade, every pension and endowment company has cut bonuses, imposed "market value adjusters" (MVAs) and slashed payouts. This week's Chadwick report puts together a picture of a hypothetical "reconstructed Equitable Life" in which it imagines that maladministration had not occurred. It concludes that Equitable Life would still have closed for new business in 2000, applied MVAs and paid lower final and reversionary bonuses, just like every other with-profits company.

A graph on page 121 of the report tells the brutal truth. The actual investment returns of Equitable Life policyholders over the past 10 years have been better than those in the average closed with-profits fund. Nothing more underlines the vacuity of the claims for compensation.

If anything, Chadwick is being generous in its selection of comparator companies used for calculating compensation. These include names such as Standard Life, Norwich Union and Prudential. The idea is that compensation will be assessed by looking at comparator payouts, deducting the Equitable payout, and paying compensation for the difference.

Yet throughout the 1990s, when Equitable was paying out lavish returns (no, of course the taxpayer can't claim those back), it was running on an extraordinarily low cushion of capital, called the free asset ratio. Those other companies, named above, more prudently maintained a higher level of capital and paid out less. Yet Equitable customers will be compensated as if they were with one of these better-managed companies. Why? If they were with one of the badly-managed ones, there would be virtually no mathematical case for compensation.

The facts remain that the management failed, non-executive directors failed, highly-paid auditors and actuaries failed, yet they have not paid a penny in compensation. Instead, the taxpayer is targeted, not because we are at fault but because we have deeper pockets. Sorry Equitable policyholders, there's nothing left.